When a bank-account owner passes away, what happens next depends on how the account was structured. For business owners, executives, and professionals, understanding these nuances is important for protecting assets and avoiding unnecessary entanglement in probate court.
If your name is on the account, the structure of the account determines whether you can access those funds or whether you must litigate your way through probate.
Joint Accounts: The Right of Survivorship
Joint bank accounts are the clearest path to continued access. Under the right of survivorship, the surviving account holder becomes the legal owner of the funds instantly upon the other account holder’s death, regardless of who deposited the money.
Importantly, the funds in a joint account are not part of the deceased's estate. This means they generally cannot be used to pay off the debts of the deceased, and the surviving account holder retains full control. To update the account, banks typically require documentation such as a death certificate, but the ownership transfer is automatic and outside of probate.
Payable-on-Death Beneficiaries: A Contractual Path
If the account has a payable-on-death (“POD”) beneficiary, the named beneficiary gains access to the funds after presenting a death certificate. This beneficiary arrangement functions as a contract between the account owner and the bank, superseding a will and bypassing probate entirely.
This route ensures clarity and speed when transferring funds after death, making it an effective estate planning tool for those looking to avoid delays or challenges associated with probate proceedings.
When No One Is Named: Welcome to Probate
If there is no joint owner and no beneficiary designation, the account becomes part of the deceased’s estate. In this case, access is frozen until probate is complete. The executor or Surrogate Court-appointed administrator must present proper documentation before the bank releases funds, which are then distributed according to the will or state law, if no will exists.
It’s worth noting that if the bank isn’t notified of the account owner’s death and the account remains inactive, the funds may eventually be turned over to the state through a process called escheatment. You then have to go through the state (in New York, you go through the New York State Comptroller’s office) to retrieve the “unclaimed funds.” This typically happens after several years of account dormancy.
Who Can Withdraw Funds Legally?
Even after death, access to funds is tightly regulated. Only joint account holders, designated beneficiaries, or court-appointed executors can legally withdraw funds. Attempting to access funds without proper authority isn’t just unwise, it’s impermissible.
Why It Matters for High-Income Professionals and Business Owners
For individuals with complex financial portfolios, including business and investment accounts, these account rules can impact estate administration, business continuity, and personal relationships. A lack of clarity or planning can result in delays, disputes, and litigation, especially when large sums or business equity are involved.
Our team at The Glennon Law Firm assists clients in navigating these complexities, particularly when related disputes or litigation arises over account access and proper asset distribution.
Conclusion: Plan Ahead, Protect Your Interests
Structuring accounts properly and having clear designations in place is a critical part of protecting your wealth and legacy. If you or a loved one is facing account-related challenges after a death or other estate or trust disputes, our litigation team is here to advise, represent, and protect what matters most.
Contact us today to schedule a consultation with one of our estate litigation experts. Together, we’ll tackle the complexities of your unique situation with care, precision, and unparalleled expertise.
To learn more about topics regarding trust and estate litigation, you may want to review the information provided on our website pages: Executor Rights and Responsibilities, Spousal Election, Undue Influence, Importance of Having a Properly Executed Will.
You may learn more about us and how we operate by visiting these pages: About Us and What Sets Us Apart.
This post is not intended as legal advice, but rather for educational purposes.